SunPower Sues SolarCity, Former Employees Over Data Theft

Ucilia Wang, Contributing Editor
February 14, 2012 | 19 Comments

Corporate espionage always makes for a tantalizing read, and here is a new script that pits a veteran solar company against an upstart: SunPower is suing five former employees and SolarCity over what it says is a misappropriation and use of confidential data.

In a lawsuit filed Monday in a U.S. District Court and first reported by Justia.com, SunPower says the five employees used their own USB drives to download “tens of thousands of computer files” including quotes, contracts, pricing lists and business forecasts and analyses, plus forecasts for SunPower’s solar panels in the next four years.

The lead culprit seems to be Tom Leyden, who was a managing director before leaving SunPower last August for SolarCity. SunPower contends that Leyden also downloaded from the company’s database at Salesforce.com information about major sales over $100 million through 2011 and the employees who worked on those deals.

As a result, Leyden then recruited some of these employees while he already had started at SolarCity, the lawsuit said. Leyden worked at SunPower from 2000 to 2011. One of the people recruited by Leyden was Dan Leary, a senior project manager at SunPower, which alleges that Leary downloaded sensitive data within days of leaving SunPower. The stories are similar for the three other defendants, and all five of them then transferred the data to computers at SolarCity, SunPower said.

SolarCity’s spokesman Jonathan Bass emailed a statement regarding the lawsuit:

"SolarCity’s commercial market share has grown significantly in the past few years and this growth threatens SunPower. Over the past few months, following its acquisition by a foreign oil company, a number of SunPower’s best salespeople decided to join SolarCity. SolarCity has created a leading service offering and a dynamic work environment to attract the best people in the industry; just yesterday we were named the 10th most innovative company in the world by Fast Company Magazine. SunPower is apparently taking exception to that.

SolarCity upholds high standards in operational integrity for itself and its employees. SolarCity takes trade secret issues very seriously and we will ensure that we act in accordance with the law."

SunPower became suspicious of data theft last December after it founded out that one of the defendants and former project development director, Felix Aguayo, was able to access his computer at SunPower even though he already had been let go. An investigation showed that Aguayo had forwarded some of his SunPower emails about customer information, price lists and market reports to his personal account in November, SunPower said. The company then looked into the computer files of the four other former employees since all of them left the company around the same time.

SunPower is asking the court to require the defendants to return the data they allegedly took without permission and to provide an account of any sales or profits that they gained as a result of using the data.

19 Comments

ANONYMOUS
February 24, 2012

Comment 17 by an anonymous poster must be affiliated with SolarCity. Justifying espionage and theft just because SunPower is owned by an oil company does not make sense. It is what it is; theft. You say that SolarCity is on the rise, not so fast my friend. This is going to hurt SolarCity and let's see if they launch their IPO as planned. Integrity is a huge factor in business today and something like this will indeed set SolarCity back in that department.

Frank Berry
February 20, 2012

Wow....it shows that business accounts are getting larger and much more lucrative now. Business is maturing everywhere in the US.

Love to interview to sell for SolarCity in the upstate NY area...with 'millions' in sales for residential and small business...."how do I sign up to sell for SolarCity"??!

Frank in Albany

ANONYMOUS
February 18, 2012

If I were a SunPower employee & my company got bought by a Foreign Oil Super Conglomerate, I'd jump ship too!

Salespeople have spent years growing & fostering relationships & I'd hate to imagine how they felt when the "GREEN" company they worked for sold their soul to a petroleum giant.

Salespeople have always taken their contacts with them. This is a slam from SUNPOWER. They're just angry and acting like the nasty oil company they are. They sued former employees before & it was tossed out of the courts & dismissed.

I for one am glad the salespeople didn't continue to sell their souls to a greedy oil company & took their talents to a company like SOLARCITY that actually cares about the environment & isn't just selling solar to make money.

Looking into the background of SOLARCITY, I noticed that Elon Musk is also on the leading edge of battery, EV & Space Technology. I suspect there will be a lot of push back from other BIG OIL companies & others envious about SOLARCITY's rise in the industry!

GO SOLARCITY GO!!!

Steve Fortuna
February 16, 2012

I've worked with Sunpower for the last 4 years, and while I don't always agree with their strategies and policies, at least they have stood behind their word and made good on things that were their fault. I wish their policies were more dealer friendly, but you get what they tell you you're going to get, as opposed to some who will tell you anything to get into your checkbook. From what I've seen of Solar City, they are highly flexible, sales-driven and 'deal conscious', and seem more driven to sign a deal RIGHT NOW. Maybe excess sales pressure from the top is creating an 'End Justifies The Means' culture.

To clarify hawkster's point: SunPower didn't solicit the offer by Total for 60% of its stock. Total saw an investment opportunity and paid a 46% premium just at the time SNPWR needed cash to stave off government subsidized Chinese competition. It was a "friendly takeover" that profited a lot of folks, including regular joes working in the solar salt mines. I spent my profits on a new Solmetric Suneye, so what 'goes round, comes round'. I hope Solar City will clean the rats from their ship before it taints their reputation - as they are very innovative and forward thinking in making solar more affordable to everyone. And that, in the end, is what we all should be shooting for.

Dave Wilson
February 16, 2012

@Jim - Agreed that data taken before leaving is probably not IT's fault, depending on policies and procedures in place. I'm referring to Mr. Aguayo being able to access data after he had been let go. That's a big IT no-no.

@hawkster - Who says that you can't have rats and vultures at the same time? Proprietary information is the property of the owner, and anyone who violates their employment agreement to compromise the value of that information is a rat, IMHO. I don't think we're talking about the Monkey Wrench Gang here.

Jay Lindberg
February 16, 2012

You talk about the top tier of Sunpowers team as "THE RATS JUMPING SHIP" I have a little different perspective, BEFORE THE VULTURES CARVE IT UP.

Client lists are easy to acquire legally and so is most of the rest of the quote "Proprietary information" on most companies operations. Get real, these are the big boys. SUNPOWER is mad because the best and the brightest in that company took their brains and expertise with them. To SolarCity - Good Luck, SUNPOWER should never have sold out to Big Oil.

Jim Jenal
February 16, 2012

From what is alleged in the Complaint, it sounds like SunPower has extensive forensic data regarding the files that were downloaded - by employees who at the time were presumably still trusted by the company. It was only after one employee accessed his email account after leaving the company and then emailed documents to another account that SP suspected anything improper was afoot. You could certainly question why the account was still active, but from those (alleged) facts, I find it hard to blame the IT department.

Plaintiff always has the burden of proof in a case like this (sorry, but I spent 13 years litigating IP cases so this is like "old home week" to me) but it sounds like the logging procedures that were in place - once blessed by an appropriate expert - will certainly hold up in court. Much bigger question is, what did SolarCity know and when did they know it? Only discovery will answer that question - but a close reading of SC's statement (in the article) has lots of attitude, but does not deny any of the allegations in the Complaint.

Tim Gard
February 16, 2012

dl, it sounds like the problem occurred before the rats jumped ship. If it was not being secured though, it might have helped the prosecution if thumb print access were in place. Guess I need to think about that myself. I do think the burden of proof is on the company however, and I am not sure the added security will hold up in a court of law unless they are caught in the act. 70% of all murders are unsolved I've heard ... and sometimes the cops know who did it!

Dave Wilson
February 16, 2012

From a different angle, as a CIO I can only say that the IT security process at SunPower was a total failure. The rats are jumping the ship, but still accessing confidential data days after leaving? Time for a new IT team.

Michael Campbell
February 15, 2012

Spot on Jim.

Jim Jenal
February 15, 2012

@Hawkster - it is one thing to be able to take advantage of the experience you acquired in your old position in your new one - CA law (which is likely controlling in this case) recognizes that.

It is an entirely different thing to bring your 1TB USB hard drive to your place of employment, download thousands of documents from your company's servers, and take them and turn them over to your new employer - which is precisely what is alleged in the complaint. If those allegations are true, it is a crime, not a foul, and the former employees (and possibly SolarCity) are likely under criminal investigation right now.

Jay Lindberg
February 15, 2012

When you leave one solar company for another, you cannot really be expected to walk away from business relationships you developed such as financing, materials suppliers and contractors.

SolarCity has some great marketing products like their residential prepaid lease program, one of the best in the industry. I can understand why SunPower and the oil company that bought them is screaming foul.

The trade secrets clause in these employment contracts are hard to enforce.

Douglas Prince
February 15, 2012

Wow! High-level corporate espionage within the solar tech industry.

We are growing up, aren't we?

Michael Campbell
February 15, 2012

NDA's are only as strong as the integrity of individuals signing them. New hires often use what they know / took from their last employer and use it to gain credibility in the next interview. With a shelf life of only six months, stolen customer data has always has been just under the surface in tech- the only difference is today technology exists to bust the people taking it. Until this industry begins selling solutions instead of products, it will continue building sales cultures that rely on desparate measures such as this. Imagine what its like to be pitched by these firms and it becomes obvious why its so easy to compete against them. The smell of desparation makes a for a bad cologne. All you have to do is tell the truth (warts and all) throughout the sales cycle and you win.

stephen christy
February 15, 2012

All Ponzi schemes come to an end.

Tom Ferraro
February 15, 2012

This is interesting in that many companies have Non Disclosure or Confidentiality agreements in place with their employees. This is a classic case of abuse of those agreements, which may have been in play. We'll see how this plays out regarding what kind of damages can be placed against SolarCity should a court rule against them.

Tim Gard
February 15, 2012

If you guys had a board member discussing companies unsecured research gathered in company discussions with someone outside of the company, and he then spoke of someone outside of the company starting a business with a name that is 'slightly' different than yours, would you fire him off the board? Would you resign yourself for being so stupid for bringing him aboard to begin with?
I hope there was pass code using fingerprints to access data in this Sunpower case, or it would be a he said, she said argument for a court.

Rich Barbarics
February 15, 2012

My Guess is that there is more to this than what is mentioned. If the Salesforce contact DB also had 'prospect' data from Sunpower, then SolarCity should be pursued and bankrupted faster than Arthur Andersen. Prospects are surely confidential assets especially when the acquiring company has no prior knowledge of them. Regardless of whether a probabilistic 'prospect' turned into a 'customer' or not, this is a flagrant theft that should include prison time for the perpetrators, if found guilty.

ANONYMOUS
February 14, 2012

Interesting story - but the statement from SolarCity is what is known in the trade as a "non-denial, denial." And a snarky one at that.

The actual complaint alleges the existence of detailed forensic evidence documenting what equipment was attached to SunPower's computers, when, by whom, and what was downloaded. If those allegations stand-up to scrutiny, SunPower's claim under the Computer Fraud and Abuse Act will be pretty compelling. It will take discovery to determine what, if anything, SolarCity got out of this. Did they encourage the individual defendants to steal SunPower's trade secrets, or did they act on their own?

Should be entertaining to see how this plays out in the weeks and months ahead.

Add Your Comments

To add your comments you must sign-in or create a free account.

Ucilia Wang

Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable...